The association between busy directors and acquisition performance

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Show simple item record Sim, Luch en_US Wells, Peter en_US Wyatt, Anne en_US
dc.contributor.editor Faff, R en_US 2011-02-07T06:29:01Z 2011-02-07T06:29:01Z 2009 en_US
dc.identifier 2008005145 en_US
dc.identifier.citation Sim Luch, Wells Peter, and Wyatt Anne 2009, 'The association between busy directors and acquisition performance', , AFAANZ, Australia, , pp. 1-47. en_US
dc.identifier.issn - en_US
dc.identifier.other E1UNSUBMIT en_US
dc.description.abstract This paper addresses the question of whether independent directors of the bidding firm are effective monitors during acquisitions and whether this effectiveness is impaired when the independent directors serve on multiple boards. The choice of the acquisition setting, where the board of directors is known to be engaged in active decision-making, facilitates a direct test of the role of independent directors as effective, external monitors of the board?s activities. We employ three indicators of the bidding board?s performance in making optimal acquisition decisions: the acquisition premium (benchmarked against subsequent performance), a new indicator comprising the conflicts of interest associated with the acquisitions (conflicted acquisitions), and the post-acquisition stock performance. The results suggest that more independent boards and busy independent directors on the bidding firm?s board are associated with more effective acquisition decisions by the board. However, busy independent directors are associated with less effective acquisition decisions when the bidding firm has higher free cash flows consistent with Jensen (1986). We also find that busy executive directors on the bidding firm?s board have no implications for the effectiveness of acquisition decisions unless the director is a busy chairperson or busy CEO both of whom are associated with less effective acquisition decisions. This paper contributes direct evidence on the effectiveness of bidding firm independent directors in their role as monitors and decision-makers. en_US
dc.language en_US
dc.publisher AFAANZ en_US
dc.relation.isbasedon en_US
dc.title The association between busy directors and acquisition performance en_US
dc.parent 2009 AFAANZ Conference en_US
dc.journal.volume en_US
dc.journal.number en_US
dc.publocation Australia en_US
dc.identifier.startpage 1 en_US
dc.identifier.endpage 47 en_US BUS.School of Accounting en_US
dc.conference Verified OK en_US
dc.for 150303 en_US
dc.personcode 104348 en_US
dc.personcode 920016 en_US
dc.personcode 100288 en_US
dc.percentage 100 en_US Corporate Governance and Stakeholder Engagement en_US
dc.classification.type FOR-08 en_US
dc.edition en_US
dc.custom Accounting and Finance Association of Australia and New Zealand Conference en_US 20090705 en_US
dc.location.activity Adelaide, Australia en_US
dc.description.keywords board composition; busy directors; acquisitions performance. en_US
dc.staffid en_US
dc.staffid 100288 en_US

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